What is Core System Modernization?
Although it sounds like a theoretic piece of managerial jargon, core system modernization is simply a process that a company uses to updates its IT applications and infrastructure. The aim is to improve its business practices and increase efficiency. And the ultimate goal is to make the business more flexible so it can support innovation as part of its growth plans.
Businesses always need to seek out a competitive edge, which often involves upgrading key areas like business operations, technology and operations.
In the insurance sector, it’s often found that systems are too slow and lack proper support for digital services. And because of a lack of data integration, customer data can’t be used to improve the process. Predictably, businesses struggle with improving services and customer satisfaction levels.
Insurance core system transformation enables companies to modernize their processes. In other words, they’re able to improve their efficiency, enhance their customer experience, and adapt to new technologies.
Benefits Of Core System Modernization
Updating core systems helps businesses become more flexible, faster, and better at adapting to change. And by modernizing these systems, companies can use – and offer – more digital services and work more efficiently. It also helps reduce the burden of old, outdated technology, so it’s easier to upgrade systems. The use of cloud technology and shared services inevitably makes operations smoother, easier to grow, and better at delivery.
How It's Done
Put simply, modernizing core systems means turning old, ungainly systems into flexible cloud-based ones. Traditional systems are broken into smaller, separate parts, which makes them easier to work with.
There are
four main ways to modernize, known as the "four R's":
- Replatform: Move systems to new platforms, like the cloud.
- Remediate: Fix specific issues in the current system.
- Revitalize: Improve existing systems without replacing them.
- Replace: Completely switch to new systems.
These can be used alone, or combined to fit a company’s own needs. And taking this approach helps with updating older processes and integrating them with cloud technology.
Taking insurance as an example, customers want:
- Easy access to policy information and fast claims processing.
- Critical services like billing, pricing, and underwriting to be quick and reliable.
- Modernized systems with more flexible products.
- Smoother processes that boost business performance and productivity.
- Faster, more user-friendly digital tools.
Collaboration And Skills Building
How can we speed up the process? Well, it depends on teamwork between businesses, IT, and partners. Using the agile approach, with scrum teams, will enable projects that develop solutions to fit company needs.
And employees
need new skills if they’re going to work effectively:
- Teamwork: Working together across departments and virtual settings.
- Design Thinking: Creating solutions that focus on the user.
- Technical Skills: Fully understanding systems like data analytics and cloud infrastructure.
Positive Outcomes
Again, taking insurance as an example, all this means that with the right approach, businesses can:
- Use AI and machine learning to simplify claims processing.
- Reduce the risk of making poor coverage decisions
- Settle claims faster and with less risk
- Cut costs when handling new clients
- Develop new services that add more value to the business
- Increase customer satisfaction with virtual assessments
- Create new digital products to meet growing customer expectations
- Boost IT performance and overall efficiency
So as you can see, core system modernization is needed – particularly in industries like insurance – to stay competitive. By converting outdated systems into flexible, cloud-based solutions, companies improve efficiency, scalability, and customer satisfaction. This also improves delivery, as well as key operations like claims processing, billing, and underwriting. There’s also scope for the use of AI and related technology, which cut costs and increase productivity.
Obviously, every market is different, but any business that lags behind its competition in this area is inviting a major problem further down the road. So it’s worth considering whether core system modernization shouldn’t be central to any plans for future growth.
